India and US Near Groundbreaking Trade Agreement

In a significant development, India could soon become the first country to sign a bilateral trade deal with the United States under President Donald Trump's initiative for reciprocal tariffs. US Treasury Secretary Scott Bessent revealed that negotiations are "very close" to a breakthrough, highlighting India's relatively lower tariffs and fewer trade barriers as key facilitators.

Reciprocal Tariffs and Trade Barriers

Indian exports are currently under a 10% tariff but are set to face a 26% reciprocal tariff starting 8 July. Bessent pointed out India's minimal non-tariff trade barriers and absence of currency manipulation as factors making negotiations smoother. This move aligns with President Trump's goal to reduce the US trade deficit by urging foreign governments to lower restrictions on American goods.

Strengthening US-India Economic Ties

The discussions took place during the World Bank and IMF's annual meetings in Washington DC, where global economic shifts were a focal point. US Vice President JD Vance's recent visit to Jaipur further underscored the importance of removing non-tariff barriers and enhancing imports of American energy and defense equipment, aiming for a "prosperous and peaceful" 21st century between the two democracies.

With India accounting for nearly 3% of US imports and a trade deficit of $45.7 billion in 2024, the potential trade pact marks a pivotal moment in US-India relations.